Everyone seems to have their own personal mortgage rate prediction. This is particularly true if you’ve got a mortgage to pay and are considering refinancing. It’s a great time to refinance as the interest rates are at an all-time low on the 30 year fixed rate mortgages. However, everyone wants to know if these interest rates will drop even lower than they are now. While it’s impossible to predict mortgage rates with 100 percent accuracy, this still seems to be a hot topic of debate.
Chairman of the Federal Reserve Bank, Ben Bernanke, has done quite a lot to keep the interest rates low. Even though it’s normal to think that the interest rates will climb again, there was an announcement recently from the Federal Reserve stating that they would work diligently to keep the rates low. While this makes borrowers quite happy, savers feel they’re being “robbed” by the banks.
Something that everyone would like is economic recovery. However, as the economy shows signs of recovering, the pressure increases on Chairman Bernanke to stop shoveling money into the economy. This probably will lead to an overall rise in the interest rates. Although, for the short term, the 30 year fixed mortgage rate will stay under 4.5 percent for a while yet.
While interest rates are as low as they can get, most analysts feel that they won’t go any lower and can only start climbing. Many people would consider this to be the best time to refinance, but that’s not totally true. With so much uncertainty in the economy, particularly in the property market, there are many reasons not to overspend.
Something else to consider in refinancing is the high costs to do so. These costs to set up a new mortgage that takes advantage of the new lower interest rates can actually jack your monthly mortgage payment UP rather than lowering it. Many people find this isn’t worth it.
There’s only a tiny chance that the interest rates will go any lower than they currently are. However, anything’s possible. But first time home buyers really need to consider the shape of the economy right now and wait until these interest rates have bottomed out.